The underlying new hypothesis of this proposal is that CD44 receptor-mediated endocytosis of hyaluronan (HA) provides a mechanism for chondrocytes to regulate local proteolytic events in the turnover of aggrecan proteoglycan (PG). During the current funding period we have determined that the local turnover of HA in cartilage occurs by CD44-mediated endocytosis, as there is no contribution of membrane-associated hyaluronidases to extracellular HA degradation. In addition we have determined that the ITEGE and DIPEN-containing aggrecan G1 domains-domains that remain bound to HA following proteolytic cleavage of PG, are co-internalized with HA by the same CD44-mediated mechanism. Furthermore, we have also shown that when metabolism is altered, and chondrocytes become more "catabolic" due to IL-1 treatment, there is an increase in CD44 expression by 6-8 fold at the protein level -- a change that increases the internalization of HA by 3 fold above control. Another critical observation that we made was that HA decorated with intact proteoglycan monomers cannot be internalized. Thus, for HA turnover to proceed, cleavage of PG within or near the G1-G2 domains is a prerequisite event. We propose that the presence of intact, highly-sulfated PG bound to HA establishes a resistance that inhibits CD44-mediated HA endocytosis. However the active cell-mediated processes that drive endocytosis also generate a focal clustering of PG aggregates, setting the stage for targeted PG degradation. Our new exciting data demonstrates that chondrocyte CD44 clusters into lipid raft microdomains as a prerequisite for endocytosis. We can now selectively manipulate CD44-mediated endocytosis of HA and determine the resultant effect on the rate of PG degradation. We will also determine whether CD44 serves as a raft-anchoring platform for MMP and ADAMTS proteinases- proteinases that recently have been shown to be present as active membrane-bound enzymes. Thus, the focus of this proposal is to determine the mechanistic link between HA endocytosis and PG degradation.